Zarnow: Two O.C. teens discover they're financially literate

Sept. 16, 2013

Updated 7:33 a.m.

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Juhyung Yoon, 17, a senior at Oxford Academy in Cypress, won first place in a 12-week online stock market competition for students sponsored by the Naveen Jindal School of Management at the University of Texas. Yoon doubled his investment, ending with a 98 percent return. SAM GANGWER, ORANGE COUNTY REGISTER

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Juhyung Yoon, 17, a senior at Oxford Academy in Cypress, won first place in a 12-week online stock market competition for students sponsored by the Naveen Jindal School of Management at the University of Texas. Yoon doubled his investment, ending with a 98 percent return. SAM GANGWER, ORANGE COUNTY REGISTER

1 of 3

Juhyung Yoon, 17, a senior at Oxford Academy in Cypress, won first place in a 12-week online stock market competition for students sponsored by the Naveen Jindal School of Management at the University of Texas. Yoon doubled his investment, ending with a 98 percent return. SAM GANGWER, ORANGE COUNTY REGISTER

Juhyung Yoon, 17, a senior at Oxford Academy in Cypress, won first place in a 12-week online stock market competition for students sponsored by the Naveen Jindal School of Management at the University of Texas. Yoon doubled his investment, ending with a 98 percent return. SAM GANGWER, ORANGE COUNTY REGISTER

Ask Juhyung Yoon and Frank Hoang how they spent their summer vacations, and they have a story to tell. They didn't have formal jobs – but they both worked. Hard.

In June, each was handed a cool million to invest – and both earned a tidy return on their investments.

They were two of 271 high school students nationally competing in the Top Performer Stock Market Competition run by the Naveen Jindal School of Management at the University of Texas at Dallas.

Yoon of Cypress finished first by earning a 98 percent return on his investment. Hoang of Anaheim finished second, earning a 67 percent return.

Yes, it was virtual money, but they invested in a virtual market that exactly mirrored reality. And the knowledge they gained about investments is valuable and real.

So is the $1,500 each received as a prize. This summer they put their virtual money to work, and it paid off.

Of course, it wasn't easy.

“That first week, I didn't know what to do,” recalls Yoon, 17, who started by buying stocks whose prices were rising. He successfully bought at the top of the market and lost $200,000 in one week.

Then Yoon realized the contest offered four video classes explaining the basics of personal finance and investing. Passing them was worth an extra $200,000 in virtual bucks.

Hoang, 18, by contrast, took the classes first and didn't start trading until July.

He began by using exchange-traded funds. He thought these mutual funds that trade like stocks would be a safer bet.

“I started out at 30th place.”

The two students, who competed against each other with user names, didn't realize until the end that both attended Oxford Academy in Cypress. Yoon is an Oxford senior now; Hoang is a freshman at UC Berkeley.

Once Yoon learned about options, he started to use them.

“An option gives you the right to buy a stock, but depending on its price, you don't have to buy,” he says. “It's a safe way to invest. It's a good way, but not the best way.”

He found himself 100th in the competition.

Hoang says his breakthrough came from an aggressive options strategy.

Awake at 6:30 a.m. daily to study the market for a few hours, he spent about three hours each afternoon studying stock performances. He noticed that stock prices would change when companies announced their earnings.

“I would try to predict their movements.”

Hoang scored a killing on Facebook with options to buy right before its summer earnings were announced. He parlayed $45,000 into $800,000.

Yoon, meantime, was getting a little more desperate.

“I thought that without taking risks, I could not win.”

He turned to the wildly unstable Asian markets: “You can lose a lot – and gain a lot.”

He watched the Korean news and markets daily and researched firms through annual reports. Yoon would spend about four hours after dinner choosing three risky stocks. If they dropped when the market opened, he would buy.

He zoomed to first place.

“It was like playing hot potato with a time bomb.”

Over the summer, both got a call from the university with questions about their strategies. They had drawn attention; their returns were the largest seen in three years of competition.

A major focus of education is teaching literacy. To be successful citizens, students must be capable at reading and writing. Financial literacy, well, that's a different subject – not always taught in school.

It's equally essential.

Hoang had studied economics but found Keynesian theory far removed from his daily life. Both students found the contest courses valuable.

Learning about insurance gave Hoang an appreciation for life's fragility.

“At our age, we have this mentality we are invincible and nothing is going to happen to us. … It's always good to have an insurance policy.”

He was prompted to ask his parents about disability insurance.

Yoon got rid of his credit cards and pays for everything by debit.

“I didn't know about bankruptcy and credit scores. … It opened my eyes.”

What did they learn about investments?

Yoon found them intimidating and hard to understand at first. He had to become fluent in annual reports.

He mentions ACRX, a pharmaceutical firm. He noticed it was going up 5 percent, but didn't buy.

“The next day it was up 30 percent,” he says ruefully. “Timing is everything.”

Yes, they made lots of virtual money – but wasn't it don't-try-this-at-home investing?

Hoang says he tried to base his actions on research and not emotions.

“I tried to make my choices as if the money were real.”

He acknowledges, though, that competition motivates him – whether to win the contest or beat other investors.

Yoon, though, flat-out says he was reckless.

“I was not prudent. I could lose 10 percent in a day … and make 70 percent on a good day.”

He says investing can be a zero-sum game.

“One person gains, and one person loses. … You can rig the dice by doing your research.”

Hoang says this experience changed his future. He is studying engineering at UC Berkeley, but now he's considering graduate school in business.

Both appreciate the foundations of capitalism.

“Investment sets up companies to grow and achieve their potential,” Hoang says. “It's the capital to expand their business.”

Yoon gestures at his iPad:

“I think about things more critically. I think about how the workers in China made it, and how Apple paid them, and how Apple marketed to sell it, and how we earned money to buy this iPad and … how the company actually affects us, and how Apple actually benefited society.”

We know how they spent their summer vacation. How are they going to spend their prizes?

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